Ivey v Genting Casinos (T/A Crockfords Club) (2017)

Summary

The subjective element of the test for dishonesty in R. v Ghosh (Deb Baran) [1982] Q.B. 1053 did not correctly represent the law and directions based on it should no longer be given. When dishonesty was in question, the fact-finding tribunal had first to ascertain the actual state of the individual's knowledge or belief as to the facts. The question whether the conduct was honest or dishonest was then to be determined by applying the objective standards of ordinary decent people.

Facts

A professional gambler appealed against a decision that the respondent casino had been entitled to refuse to pay him winnings of £7.7 million on the basis that he had cheated.

In a card game of chance, Punto Banco, the gambler had used the technique of "edge-sorting", which relied on noting tiny physical differences in the edges of the cards. By claiming to be superstitious, he persuaded the croupier to use the same pack of cards and to turn "lucky" cards around, enabling him to use the technique. That increased his odds of winning. The gambler believed edge-sorting was an honest technique. He sued for his winnings. The judge held that although the gambler was genuinely convinced that what he had done was not cheating, he had in fact and law cheated, thus breaching the implied term against cheating in his contract with the casino.

The gambler argued that the test of what was cheating was the same for the implied term as for the criminal offence of cheating at gambling in the Gambling Act 2005 s.42 and that cheating necessarily involved dishonesty, which had not been demonstrated in his case.

Held

Cheating - The concept of cheating long pre-dated s.42. However, cheating carried the same meaning when considering an implied term not to cheat and when applying s.42. Section 42 did not exhaustively define cheating, and the elaboration in s.42(3) was explanatory rather than definitive. The section left open what was and was not cheating. For the gambler's proposition that cheating necessarily involved dishonesty, he had relied on a discussion of the common law offence of cheating, which had been abolished by the Theft Act 1968. However, there was no reason to suppose that the framers of the 2005 Act had adopted an analogy with an offence abolished 40 years earlier. Although it made sense to interpret the concept of cheating in s.42 in the light of the meaning given to cheating over many years, it made no sense to interpret cheating by reference to dishonesty, an expression introduced into the criminal law for different purposes in 1968. "Cheating", in the context of games and gambling, carried its own inherent stamp of wrongfulness. Although "honest cheating" was an improbable concept, it did not follow either that all cheating ordinarily attracted the description "dishonest" or that anything was added to the legal concept of cheating by an additional legal concept of dishonesty. As an element of a criminal charge, dishonesty was not a defined concept. It was not a matter of law but a jury question of fact and standards. Except to the limited extent that s.2 of the 1968 Act required otherwise, judges must not attempt to define it, R. v Feely (David) [1973] Q.B. 530 applied. Likewise, whether conduct amounted to cheating, given the nature of the game, was a jury question. The addition of the legal element of dishonesty would unnecessarily complicate the question. The judge's conclusion that the gambler's actions amounted to cheating was unassailable. The key factor was the arranging of the cards so that he would know whether the next card was high or low value. He had taken positive steps to fix the deck. In a game which depended on random delivery of unknown cards, that was inevitably cheating (see paras 38-50 of judgment).

Dishonesty and the Ghosh test - Since R. v Ghosh (Deb Baran) [1982] Q.B. 1053, in criminal cases, the judge had been required to direct the jury to apply a two-stage test for dishonesty: firstly, whether the conduct complained of was dishonest by the lay objective standards of ordinary reasonable and honest people; and, if the answer was yes, secondly, whether the defendant must have realised that ordinary honest people would so regard the behaviour. There were serious problems about the second stage: the more warped the defendant's standards of honesty, the less likely was a conviction; the rule was not necessary to preserve the principle that dishonesty had to depend on the defendant's actual state of mind; it set a test which jurors often found puzzling; it had led to divergence between the test for dishonesty in criminal and civil cases; it represented a significant departure from the pre-1968 Act law, when there was no indication that such a change had been intended; and it had not been compelled by earlier authority. Accordingly, the second stage did not correctly represent the law and directions based on it should no longer be given, Ghosh overruled in part. When dishonesty was in question, the fact-finding tribunal had to first ascertain, subjectively, the actual state of the individual's knowledge or belief as to the facts. The reasonableness of that belief was a matter of evidence going to whether they had held the belief, but it was not an additional requirement that the belief had to be reasonable; the question was whether it was genuinely held. When the state of mind was established, the question whether the conduct was honest or dishonest was to be determined by applying the objective standards of ordinary decent people. There was no requirement that the defendant must appreciate that the conduct was dishonest by those standards, Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 A.C. 378 and Barlow Clowes International Ltd (In Liquidation) v Eurotrust International Ltd [2005] UKPC 37 applied. Accordingly, had cheating at gambling included an additional legal element of dishonesty, that would have been satisfied in the instant case (paras 54-57, 74-75).